GM506 diss 3

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Purdue University *

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GM506

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Business

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Feb 20, 2024

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docx

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Uploaded by DrDinosaurPerson592

A pro forma income statement is a business plan showing the projection of anticipated sales, expenses, and income. It is the corporation gathering financial information and attempting to forecast how their business will appear in the future (Block et al., 2022). A pro forma statement is created in the same way as an income statement is. The distinction is that it projects future figures rather than past ones. If a corporation feels there will be reduced demand for its products in the future, it plans for it on the pro forma. All the information in this statement is based on what the company anticipates will happen in the future. The pro forma balance sheet examines predicted reports based on receivables, inventory, payables, and other accounts that can be attributed to anticipated earnings and borrowing requirements (Block et al., 2022). A cash budget that corresponds to the pro forma statement is developed by a corporation based on future estimates. A corporation creates a cash budget by attempting to estimate future demands and operating income and express. A financial budget can be quite accurate if sufficient research and assumptions are made (Hogan et al., 2017). Overall, the pro forma statements also demonstrate to lenders or investors how you intend to use their funds to build your business sustainably. The statements are based on what-if scenarios. For example, if a company receives a $100,000 loan for the coming year, the pro forma

statements for that scenario would reflect the income, account balances, and cash flow with a $100,000 loan. It’ll explain how the money would be used overall for the business plan.

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GM506 diss 3

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